Opening Bell: 05.02.14

Criminal Charges Against Banks Risk Sparking Crisis (Bloomberg)
Stung by lawmakers’ criticism that multibillion-dollar settlements have done too little to punish Wall Street in the wake of the financial crisis, prosecutors are considering indictments in probes of Credit Suisse Group AG and BNP Paribas SA, a person familiar with the matter said. Even after talking with financial regulators about ways to mitigate damage — such as ensuring banks keep charters — prosecutors might not fully understand consequences for the market, according to industry lawyers and bankers who are following the case. Bank clients — including trustees, fiduciaries and pension funds — could be forced to cut ties with a financial institution labeled a criminal enterprise, the lawyers and bankers said, asking not to be named because they weren’t authorized to talk publicly. Counterparties also might think twice before entering into billion-dollar transactions with such firms. Damaging a bank’s business could lead to broader fallout across the financial industry, just as Lehman Brothers Holdings Inc.’s collapse in 2008 prompted investors to withdraw from other firms on concern its exit would set off a wave of losses.

U.S. Looks Into Wagers, Pro and Con, on Herbalife (Dealbook)
Three federal agencies and one billionaire hedge fund manager have placed Herbalife under the microscope, scrutinizing whether the diet-supplements company is a pyramid scheme. But Herbalife is not the only one under investigation. Some federal authorities are pursuing other inquiries that might expand the regulatory gaze from Herbalife to the traders who traffic in the company’s stock. The authorities have trained their focus on traders with contrasting views of Herbalife, according to people briefed on the matter who spoke only on condition of anonymity. As one group wagered that Herbalife was a pyramid scheme — William A. Ackman, the billionaire hedge fund manager, has staked a $1 billion bet on that belief — other investors expected the company to emerge unscathed. Neither side has been accused of wrongdoing. Still, a number of well-timed bets for and against Herbalife caught the eye of the Securities and Exchange Commission and the F.B.I., the people briefed on the matter said, raising questions about possible insider trading, disclosure violations and market manipulation.

Yellen’s Fed Resigned to Diminished Growth Expectations (Bloomberg)
Federal Reserve Chair Janet Yellen and her colleagues have lowered their sights on how fast the economy needs to expand to meet their goal of cutting unemployment. No longer are they saying growth must accelerate from the 2 percent to 2.5 percent pace it has generally averaged since the recession ended. Instead, they are stressing the importance of preventing the expansion from faltering. Exhibit number one: the Fed chief herself. Yellen said on April 16 that a key question facing the central bank is what “may be pushing the recovery off track.” Contrast that with her comments on March 4, 2013, of the importance of seeing “a convincing pickup in growth.”

EBay Settles No-Poaching Antitrust Case (NYT)
The deal, announced by the Justice Department on Thursday, follows the pattern of the department’s 2010 settlement against Google, Apple, Intuit and other Silicon Valley companies over similar accusations. Like those companies, eBay is prevented from entering into anticompetitive hiring agreements for five years. A related case against eBay filed by the California attorney general’s office was also settled. EBay agreed to pay $3.75 million to the state, a sum it said would cover civil penalties, lawyers’ fees, administration of the settlement and compensation to those who worked at eBay and Intuit. Secret deals not to hire a competitor’s employees were common in Silicon Valley in the latter part of the last decade, and Steve Jobs of Apple was a major instigator and enforcer of the agreements. EBay is not a competitor of Intuit, which develops tax preparation software, but both embraced a hands-off relationship.

Macquarie Group Profit Jumps 49% as Trading Revenue Climbs (Bloomberg)
Profit for the year ended March 31 rose to A$1.27 billion ($1.17 billion), the Sydney-based firm said in a statement today. That beat the gain of as much as 45 percent the firm forecast on March 24 and compared with profit of A$851 million a year earlier. The bank’s shares fell the most in two weeks as it forecast similar earnings for the year to March 2015.

T0pless Woman Dances With 12,000 Bees (HP)
The Portland, Oregon-based beekeeper describes her bee dances as “a duet among many.” “These 12,000 bees push with their powerful wings from each side of my body, I resist and then I let go and flow and move with them,” she writes on her website.” It is a deep meditation and I feel the hive mind surround me, hold me, and expand my body on a cellular level.” In order to attract the bees to her topless body, Mapelli anoints her body with a special pheromone oil that is equivalent to the scent of 100 queen bees. The bees usually stay on her body for about two hours at a time. Mapelli says she’s been stung more than 100 times since her first bee dance in 2001, but that doesn’t bother her. “I just want people to understand that they don’t need to fear nature,” she said.

Britain’s Austerity Finally Leads to Economic Growth (BusinessWeek)
Figures released on April 29 show the economy expanded 0.8 percent in the first quarter, up from 0.7 percent in the fourth. That performance puts Britain on track to have the fastest-expanding economy among the Group of 7 developed nations this year. The economy grew at an annual rate of 3.1 percent as of the end of the first quarter.

Steven Cohen Leaves Robin Hood Board After a Decade (Bloomberg)
Steven A. Cohen, who closed his hedge-fund firm SAC Capital Advisors LP this year to settle allegations of insider trading, is stepping down as a director of the Robin Hood Foundation after 10 years on the board. Cohen, 57, who now manages his personal wealth at Point72 Asset Management LP, will join the Robin Hood emeritus board, he said in a letter to Barry Sternlicht, chairman and CEO of Starwood Capital Group LLC and chairman of the charity’s board.

Poker-Playing JPMorgan VIX Trader Wien Joining Och-Ziff (Bloomberg)
Wien, 29, will trade equity-index derivatives at New York-based Och-Ziff, he said yesterday in an e-mail to clients and co-workers. He joined JPMorgan, the biggest U.S. bank, in 2012 to trade options and futures on the VIX, as the Chicago Board Options Exchange Volatility Index is known. In his e-mail, Wien thanked JPMorgan colleagues for the two-year experience. “I also appreciate greatly all of your advice and encouragement regarding the best ways to lose a few pounds as well as to improve my fashion sense,” Wien wrote. “Rest assured that while I haven’t necessarily heeded any of that advice to date, I assure you that I will at some point.”

Warren Buffett Wants Lower Hotel Prices for Berkshire’s Annual Meeting in Omaha (WSJ)
Ahead of the annual shareholder meeting for his Berkshire Hathaway Inc. this weekend, the chief executive and famed investor complained of “price gouging” by local hotels when setting rates for the gathering. Making matters worse—at least in the eyes of hotel operators—is that Mr. Buffett urged his acolytes to consider saving a few bucks by booking rooms through Airbnb Inc., the online startup that has become a scourge of the hospitality industry. The kerfuffle comes amid a Midwestern rite of spring, when tens of thousands of Berkshire shareholders descend on Omaha—and hotels in the area charge some of their highest prices.

Block-Long Sinkhole Devours Cars In Baltimore (AP)
Officials say a block-long sinkhole opened up in a residential neighborhood in northeast Baltimore, sucking in several cars and forcing the evacuation of several houses. The fire department tweeted on its official Twitter account that a sinkhole opened up Wednesday afternoon in the first block of 26th Street. The sinkhole opened next to railroad tracks used by CSX. The block of rowhouses was being evacuated and a building inspector has been called. The fire department said no injuries had been reported.

Makes no sense. Buffett, who is supposed to be a paragon of capitalism, is bashing hotel pricing decisions that are driven by basic supply and demand. At the higher prices, Omaha area hotels have 96% occupancy. If they didn't raise prices, they'd just end up having to turn people away.

SAC

Mary Jo White was the top federal prosecutor in New York City during Bill Bratton’s first run as the Big Apple’s top cop, and she learned a few lessons from his “broken windows” theory: Clean a place up a little, and throw the fucking book at the street urchins who are messing things up with […]